Mixed Fortunes, But Little In The Way Of Strong Direction

T-Notes have been happy to meander along, last -0-01+ at 132-10+, sitting within the confines of a 0-03+ range, with little in the way of meaningful macro headline flow apparent overnight. The cash Tsy curve has seen some light steepening, with longer dated Tsys cheapening by ~1.0bp vs. Monday's closing levels. Tuesday's 7-Year Tsy & 2-Year FRN auctions present the final issuance hurdles ahead of Wednesday's FOMC decision, while consumer confidence data headlines the local economic docket.

• Yields were marginally mixed across the cash JGB curve, with little in the way of definitive movement observed. Futures ticked lower during the morning but recovered from worst levels to last trade 4 ticks lower on the day at typing, holding to a narrow range. The only real point of note on the local front saw Japan confirm that it will set up mass a vaccination centre serving Tokyo & the surrounding areas, although Chief Cabinet Secretary Kato stressed that decisions re: the scale and manufacturer of the vaccine have not been finalised. The latest BoJ monetary policy decision held no surprises, with the Bank's headline monetary policy settings and forward guidance maintained, while the Bank's immediate CPI outlook was shifted lower alongside an uptick in its GDP forecasts. The Bank stressed that the risks for prices are skewed to the downside, while the risks to economic activity are more balanced over the medium term, but hold a downward skew in the immediate term. Kataoka provided the usual dovish source of dissent. The decision and the tweaks to the Bank's economic forecasts were bang in line with wider expectations.
• The ACGB curve has flattened in Sydney trade. YM unch., XM +2.5. Local headline flow has once again been limited at best, although swappable A$ issuance is at the fore. Transurban Queensland Finance launched its previously touted round of 10.25-Year MTN issuance (set to price today), while Network Finance is taking IOIs on long 7-Year fixed/FRN issuance. Swappable A$ issuance can support ACGBs around the time of pricing.